Comment by goodcanadian | Hacker News Reader

Comment by goodcanadian | Hacker News Reader

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On the contrary. Housing demand is elastic. Three people can share a single apartment or they can each have their own. The latter takes three times as many apartments as the former. The strategy people choose will depend strongly on what they can afford. The tighter the supply is, the higher the price, the more people you will find living in each unit.

The reason the price is capped by the lowest income is precisely because demand is elastic, if the landlords raised prices any, they would find themselves without tenants. The prospective tenants might move back in with their parents, for example (and yes, some of them might just end up homeless). There is insufficient demand at a higher price level.

Utilities, eating cheap food at home, and housing are inelastic. Try living without power.

Sure, living without power sucks, but above a bare minimum, the amount that is used is highly elastic. If I am having trouble paying the bill, I will absolutely keep use to a minimum.

Elastic means you can go without it. Can you go without housing?

Well, yes, but that is not what elastic means. Elastic means not fixed. The demand for housing can vary quite a lot even for a fixed population, so it is quite elastic. Demand for food on the other hand is much less elastic, but even there, I wouldn't call it completely fixed as people can change what they eat even if they can't drastically change the number of calories they consume.

What you're talking about is price elasticity, which is not the same thing. Here, I'll paste in a definition of inelastic:

Inelastic is an economic term referring to the static quantity of a good or service when its price changes. Inelastic means that when the price goes up, consumers’ buying habits stay about the same, and when the price goes down, consumers’ buying habits also remain unchanged.

Yes, I am using the same definition that you quoted. I will try one more time:

What happens when an adult child moves back in with their parents? They have "gone without" one unit of housing.

What happens when three friends move in together? They have collectively "gone without two" of the three units of housing that they would have otherwise have occupied.

Conversely, what happens when my wife kicks me out because I spend too much time on Hacker News? I am now looking for new housing.

In each case, the number of people remains fixed, but the demand for housing has changed. Price will definitely affect what strategy people adopt: whether to live alone or share with friends or whether to live in a cramped apartment or in a 3 bedroom house.

To first approximation, everyone needs a place to live,* but there is more elasticity in the amount housing each individual consumes than is commonly believed.

*I have known several people who have deliberately gone without housing entirely for a time in order to save money.

Another way to think about inelastic is it is relative, not absolute.

Textbooks, teachers, and professors, love to use gas as an example of an inelastic product when teaching the topic. However, if gas hit $100 a gallon you better believe people would be driving less.

Yes, gasoline is interesting because demand does seem quite inelastic, especially over short periods of time. If prices remain high for extended periods, you sometimes hear of people changing to more fuel efficient vehicles, but I don't think I've ever heard of people changing their driving behaviour in response to gas prices. I find it particularly interesting because it is one I naively feel like should be more elastic than it is.

This was a thing in recent years..

In the 90s it was normal for truck drivers to literally drive 100mph in some parts of the country (No, I'm not making this up. A few states even had no speed limit on their freeway and semis would drive even faster.), but once gas prices rised during the bush administration most companies capped their driver's speed to 62mph to increase mpg.

During this time when gas prices shot up people stopped traveling for vacations as much. Ride share programs popped up at this time too. This was the time I got my first remote job, but that may be a coincidence.

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